The Release of Indian Tender Halts the Decline in Global Urea Prices

This week saw the long-awaited announcement of the Indian Urea tender, which will close on March 3rd, 2023, with shipments beginning on June 1st, 2023. Several factors contributed to the market's conflicted response, including the extended shipment time and India's low demand of just 1 million MT. However, the market players anticipate additional price declines once India's price estimate from the tender is announced. The price of Urea appears to have temporarily struck a floor. The Middle East and Russia are expected to battle it out, with both regions having plenty of supplies available.

Chinese domestic Urea prices are close to $400/MT; therefore, they are not anticipated to be included in the bidding; nonetheless, given that shipments out of the Middle East have been slow for the previous month. Saudi Arab manufacturers anticipate a strong target for the tender, while dealers at the lower end of the pricing range increased their prices in response to news of the Indian tender. Similarly, the price of Urea in Brazil increased by almost $20/MT as Brazil's high fertilizer prices are boosting Urea demand, and early purchasers are finalizing deals for the upcoming spring season. The price range was estimated at $330-340/MT this week, increasing the average price by $2.5/MT despite the lack of trade activity from the Middle East. The price of Urea decreased by 6% in the US market in the fourth week of February to the settlement price of USD 366 per MT FOB Illinois on February 24th.

As per ChemAnalyst, the Urea at the ports cleared for exports has made its way back to a high domestic spring demand, suggesting that China does not have much to offer. Furthermore, in some other markets, Urea prices stabilized as traders hurried fast to close out their short positions in the near term to avoid going up against the Indians. Therefore, it is anticipated that the demand picks up in the Urea markets may firm in the near term.